Order Type

Take-Profit — Definition & Example

A pre-set order to exit a profitable position at a specified favourable price.

Take-profit (TP) orders are limit orders set above the entry (for longs) or below (for shorts) at the planned profit-taking level. They remove emotion from the exit decision by pre-committing to a level. Combined with a stop-loss in an OCO order, they create a hands-off trade-management system. The pre-defined target also forces the trader to think about risk-reward before entry.

Example

Buy ₹500, target ₹520 (4% profit). Take-profit limit sell placed at ₹520. When price prints ₹520, the position closes automatically with a ₹20/share gain.

Limit Order Stop Order OCO Order Bracket Order Risk-Reward Ratio Premature Exit Anchoring Bias

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Take-Profit — Definition & Example

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